Wealth managers emerging from the pandemic have a bright road ahead. Unless industries such as leisure and high-street retail, financial services have not experienced a fall in demand over the 2020 & 2021 calendar years.
Therefore, UK wealth managers are generally well-positioned to provide services to manage the growing private wealth of households in Britain.
In this article, we’ll touch upon the best practices which are allowing firms to reap the pandemic ‘wealth dividend’ and increase assets under management.
Allow clients to meet remotely
Service delivery remains impacted as rolling lockdowns and restrictions continue to change on a month-by-month basis.
Where in the past, a meeting would have been held in the office of a wealth manager, such meetings are still being primarily conducted over the phone or a video call.
This medium is presenting issues to prestigious wealth managers in particular. Firstly, a face-to-face meeting would provide opportunities to indulge and wow a client. From the prime office space to luxurious reception and meeting rooms, a wealth manager could ensure that every aspect of a client visit was pleasant.
Confined to a phone call, the average account manager acknowledges that this medium is no different to a call with a utility provider or insurance company.
This has elevated the importance of polished, crisp delivery of messages and the polite and affable mannerisms that clients would expect of a respected adviser.
Reserve a financial safety net – insurance or otherwise
The present economic climate is one of rapid change, particularly in the workforce. While some sectors are under sustained pressure to make employees redundant, following the end of the furlough scheme, other employees feel empowered to take the decision not to work. This is leading to the phenomenon people are calling the ‘great resignation’.
Whether a change in role is involuntary or not, a wealth manager can no longer assume that their client will remain in employment for the next five years.
This places a spotlight on the financial protection and other safety nets a client may have to replace lost income in the very short term.
This is traditionally achieved through a combination of short-term savings available via instant access banking, or an income protection insurance policy. A combination of both is recommended, as the insurance policy is unlikely to cover any scenario in which an employee handed in their letter of resignation.
It’s important that wealth managers are having effective conversations with their clients to understand the likelihood of a semi-retirement or break from work in the near future as things can quickly change.
Recognise the financial cycle
In 2022 the global financial markets are enjoying yet another year of steady rises. The US equities index S&P 500 has not endured a fall over a rolling 12 month period since the financial crisis of 2009.
This can usher an era of complacency into financial decision making. It’s crucial that both the adviser and advisee understand that this benign period is not likely to continue indefinitely.
Wealth managers should place greater emphasis than ever on communicating the risks of equity investments. Just because these risks have not manifested themselves in recent memory, does not mean that they have disappeared.
Open questions are an effective way to address the risk appetite of an individual. We can ask ourselves – how would we feel if our investments fell by 40% in value this year? Would we panic and feel we needed to sell them? By considering hypothetical scenarios such as these, a wealth manager can tease out whether a client is only apparently satisfied with the risks they are taking because they are in fact largely ignorant of those risks.
